Ethics and compliance top of mind for GCs

“I sleep like a baby, meaning I wake up every night screaming and crying.”

Those were the words of Larry Thompson, EVP. Government Affairs, GC and Corporate Secretary, PepsiCo., as he discussed the weight of ethics and compliance on the head of a general counsel at the opening session of the sixth annual Global Ethics Summit.

Randy Milch, EVP, Public Policy and GC, Verizon, echoed that sentiment, stating that sometimes, it seems like the entire world is out to get us. He says that protecting a company’s reputation means you feel the weight of regulation, and that he feels the need to keep a finger on anything that could be a trouble spot.

He emphasized the big role that social media plays these days, and notes that his company has a number of people who keep tabs on social media, with an emphasis on addressing customer concerns and identifying trends that may appear in social media threads.

Thompson spoke about the change in enforcement focus by the government, with regulators becoming more aggressive in their investigations, using a number of new channels to gather information and raising the stakes. He spoke of recent developments of compliance programs, as many companies merely deployed “paper programs,” not even identifying who was in charge of this function. As time went on, he saw the function grow and spread out from something more than compliance to entail ethics and integrity as well.

Milch echoed the concept of evolution, noting how the compliance function at Verizon migrated to the GC’s office, where he put more attention on it than previously. He supported the idea that ethics was as important as compliance, and noted how Verizon moved the ethics function to the HR department.

In both of these companies, the compliance function reports to the GC, though the moderator of the session, Holly Gregory of Sidley Austin, noted that many companies do not use this reporting model. Thompson noted that the structure depends on the industry and company in question. He pointed out that, under SOX, the GC represents the interest of the company, not any particular executive. Many compliance issues, he said, have legal ramifications, and Thompson sees a close relationship between the CCO and the GC being key to success. He does note that the CCO should have some independence, like at PepsiCo, where the CCO has the option to meet with the board or executives without the GC being present.

At Verizon, the CCO reports to the GC and the audit committee. This creates a robust effort to foster relationships and communication, allowing the CCO to get her work done in critical areas, protecting the company quickly and efficiently.

The topic of how a GC or CCO can add value to a company came up. Milch reinforced the idea that compliance is everyone’s business, and suggested getting everyone in the business involved in compliance. He recounted a time when he brought together business and compliance leaders to discuss errors that had been made. The meeting focused on ensuring that there was clear ownership and target dates for all compliance matters. He stated that legal departments are not the department of “no,” but rather the group that helps get to “yes” in a legal and ethical manner.

“Get to know the business,” Thompson advised, stating that this put any GC a better chance to give input and help the company be successful. That, perhaps, was the simplest and best advice of all.